Impending Contract Renewals: A Futuristic View of the Renewals Market Place

7/28/2019 Impending Contract Renewals: A Futuristic View of the Renewals Market Place

1/12

Topic: Impending Contract Renewals:

A Futurist ic View of the Renewals Market Place

Copyright 2013, Everest Global, Inc.EGR-2013-4-PD-0868

Information Technology Outsourcing (ITO)Market Report: May 2013 Preview Deck


2/12


2

Our research offerings for global services

Subscription information The full report is included in

the following subscription(s) Information technology

In addition to publishedresearch, a subscription mayinclude analyst inquiry, data

cuts, and other services

If you want to learn whetheryour organization has asubscription agreement orrequest information on pricingand subscription options,please contact us:

[email protected] +1-214-451-3110

Market VistaGlobal services tracking across functions, sourcing models, locations, andservice providers industry tracking reports also available

Custom research capabilities Benchmarking | Pricing, delivery model, skill portfolio Peer analysis | Scope, sourcing models, locations Locations | Cost, skills, sustainability, portfolio Tracking services | Service providers, locations, risk Other | Market intelligence, service provider capabilities, technologies

Healthcare

Information

technology

Finance & accounting

Procurement

Banking, financialservices, insurance

Global sourcing

Cloud Vista

Human resources Recrui tment process

TransactionIntelligence

PricePointService providerIntelligence
mailto:[email protected]:[email protected]


3/12


3

Background and methodology of the research

Background of the research The sourced services is a large US$400 billion market with deals lasting for an average of two to three

years. As a result, a large portion of the market scope comes back to the planning/negotiation table ascontracts keep expiring. Most of the deals had originally been procured via a competitive process involvingRequest for Proposals (RFPs), capability assessment, and short-listing of service providers

Renewals and recompetes provide opportunity for non-incumbent players to expand their wallet sharesamidst disruptive factors such as saturation, slowing growth rate, and newer and more agile competitorsetc. It also allows buyers a chance to make course corrections based on lessons learned during the lifetime

of the just-concluded engagement and adjust sourcing strategy to suit current business environment End-of-term assessments on the part of buyers also bring newer solutions within contention. For example, a

traditional infrastructure deal being serviced by a full-service MNC provider may now be open for pitch byoffshore service providers. There may also be scope for next generation IT technology paradigms, such as,cloud computing, to play a significant role. This research provides an analysis on the impending renewals inthe coming 12-18 month period, focusing on the assessment of one large ITO engagement coming up forrenewal

The scope of this report includes: Analysis of the ITO and BPO markets with deals in scope that are to renew in the future Key vertical, geographical, and scope-based trends Observations on how future renewals might look Implications for key stake holders


4/12


4

Removed deals that expired before April 1, 2013

This research only focuses on deals that will renewin the future, specifically after April 1, 2013

The analysis shared in this report is based on Everest Groups

Transaction Intelligence Database, the most comprehensive

organized record of publicly announced outsourcing deals

Removed defense and government deals

Such deals usually are different from the regular

commercial outsourcing contracts with very differentsales diligence, contract scope, and set of providersspecially targeting this segment of buyers

Filters

Removed pure telecom and consult ing deals

Telecom deals differ in key characteristics,specifically, they are, typically, voice network andequipment maintenance deals

Consulting deals are usually one-time contracts

Removed deals that cannot be categorized

Certain deals cannot be categorized due to lack ofsufficient information. This report ignores such deals

4,358 cont racts

3,059 contracts

2,694 contracts

2,612contracts

The analysis was performed on 2,612 outsourcing deals that expire on or after April 1, 2013

Across nine industry buckets

Four geographical regions

Seven ITO towers and fourBPO functions in scope

TI database

1

2

3

4

Accounts formore than 30%

of the entiresourcing market


5/12


5

Table of contents (page 1 of 2)

Background and methodology 5

Summary of key messages 7

Section I: Overview of contracts nearing end of term 10

Summary 11

Trends by cumulative total contract value among deals up for renewal 12

Overall outsourcing renewal trend 17

ITO renewals (global) 18

BPO renewals (global) 19

Industry-wise renewal trends 20

Geography-wise renewal trends 21

Renewals in defense and government sectors 23

Renewals by telecom service providers 25

Section II: Deep-dive into upcoming renewals by scope 26

Summary (ITO trends) 29

ITO trends by industry 30

ITO trends by geography 34

ITO renewal opportunities by industry 39

ITO trends by service provider category 40

Topic Page no.


6/12


6

Table of contents (page 2 of 2)

Section II: Deep-dive into upcoming renewals by scope (continued)

Summary (BPO trends) 45

BPO trends by industry 47

BPO trends by geography 51

BPO trends by service provider category 54

Section III: Future renewals peek under the hood 56

Summary 57

IO deals geographical trends 59

ADM deals geographical trends 63

Offshore service providers replacing incumbent MNCs 66

Prominence of GICs 68

Section IV: Implications for key stakeholders 69

Appendix 73

Glossary of key terms 74

ITO research calendar 76

Recommendations 77

Topic Page no.


7/12


7

Summary of key messages (page 1 of 2)

IT contracts will witness a dip in average deal size during the "12-18 month"period

Telecom has large sized IO and ADM deals for renewal in the next 12 monthswhile manufacturing has large sized bundled deals for renewal in the same period

Large multinational providers dominate renewal spending among IT contracts

Deep-dive intoupcoming renewalsby scope ITO

Overview ofcontracts nearingend of term

During next 18 months, over US$90 bill ion worth of IT and BPO contractswill be up for renewal

BFSI, manufacturing and telecom will drive IT renewals in the next 18 monthswhile BFSI dominates BPO renewals

Western Europe will have greater proportion of renewals, however, of smalleraverage size as compared to North America

This report investigates the contracts that are going to come up for renewal during the next 18 months startingApril 1, 2013. It provides analysis of IT and BPO deals along a number of silos e.g., industry, geography, andservice provider category. Additionally the report offers a more detailed look into deeper level trends in ITcontracts reaching end of term.

Some of the findings in this repor t, among others, are:


8/12


8

Summary of key messages (page 2 of 2)

Contracts with datacenter or network in scope will have the highest frequencyamong IO renewals in the next 18 months while contracts with maintenance inscope among ADM renewals will witness a spurge in frequency in the"12-18 month" period

In the recent past, renewals with incumbents havebeen going down. Earlier, 95%of renewals used to stay with incumbents as opposed to 75 to85% currently

Global In-House Centers (GICs) are slowly regaining prominence as serviceproviders are losing parts of contracts to them

Future renewals peek under thehood

Among the single-tower BPO deals, HRO and contact center contracts will driverenewals in the next 18 months

BFSI and manufacturing will see most action on the BPO front Unlike IT contracts, BPO contracts will witness a jump in average size during the

12-18 month period

Deep-dive intoupcoming renewalsby scope BPO


9/12


9

This study offers four distinct chapters providing a deep dive

into key aspects of the global sourcing market; below are four

charts to illustrate the depth of the report

Source: Everest Group (2013)

IT renewals by scope of service IT renewals opportunity

IT renewals by industry vertical Deep dive into impending ITO renewals

Sum of TCV of deals for renewalUS$ billion

Deals currently running with said tower in scopeNumber of deals

All impending renewals

Datacenter

Desktop

Network

Helpdesk

Application development

Application maintenance

Consulting

0-12 months 12-18 months

Bundled

ADM

IO

IT renewal opportuniti es by vertical and scope

Deal renewal volum e

De

alrenewalopportunity

Low High

High

Industry BB

Industry AA

Industry DD

Industry CC

Industry EE

Industry FF

Industry GGIndustry HH

Industry II

Number of deals for renewal across indust riesNumber of deals

BFSI

Energy & utilities

Healthcare

Manufacturing

Retail

Services

Technology

Telecom

Travel & transport

Others

ADM

IO

Bundled


10/12


10

ITO research calendar

Topic Release date

Published Current

November-2012Application Services Crowdsourcing or Outsourcing

December-2012IT Services Landscape Market Size, Trends, and Buyer Insights

Q2-2013Consumerization of IT Enabling Enterprise Mobility

Application Outsourcing Market Update 2013 Q2-2013

Infrastructure Outsourcing Market Update 2013 Q2-2013

Remote Infrastructure Management Market report Q3-2013

Verticalizing Infrastructure Services Q3-2013

IT Service Landscape with PEAK Matrix Assessment 2013 Q4-2013

December-2012Who is Moving Enterprise IT's Cheese?

J anuary-2012Application Services Past, Present, and Future

March-2012How to Overcome Roadblocks while Shifting to Output-based Pricing?

May-2012Impending Contract Renewals: A Futuristic View of the Renewals Market Place

Assessment of RIM Providers Q4-2013

Network Service Outsourcing Q4-2013
https://research.everestgrp.com/Product/11943https://research.everestgrp.com/Product/11943https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11948https://research.everestgrp.com/Product/11948https://research.everestgrp.com/Product/11978https://research.everestgrp.com/Product/11978https://research.everestgrp.com/Product/12063https://research.everestgrp.com/Product/12063https://research.everestgrp.com/Product/12063https://research.everestgrp.com/Product/12063https://research.everestgrp.com/Product/12063https://research.everestgrp.com/Product/11978https://research.everestgrp.com/Product/11978https://research.everestgrp.com/Product/11978https://research.everestgrp.com/Product/11948https://research.everestgrp.com/Product/11948https://research.everestgrp.com/Product/11948https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11943https://research.everestgrp.com/Product/11943https://research.everestgrp.com/Product/11943


11/12


11

Additional ITO research recommendations

The following documents are recommended for additional insight into the topic covered in t his research report. The recommended

documents either provide additional details on the topic or complementary content w hich may be of i nterest

1. IT Services Landscape Market Size, Trends, and Buyer Insi ghts (EGR-2012-4-R-0809); 2012: Everest Groups research on ITservices market estimates its size across different service segments, geographies, and industries. It also analyzes the adoption ofnext-generation services, buyer sourcing preferences, and deal trends

2. Enterprise Cloud Adopt ion: Year 2012 in Review (EGR-2013-4-R-0849); 2013: This research, focusing on the cloud adoption in 2012,is a part of the periodic Everest Group Cloud Vista enterprise cloud adoption report. It analyzes various deals signed by service providersin terms of buyer adoption trends by industry, geography, size, cloud opportunity, roles of the providers, insights on key deals, etc.

For more information on this and other research published by the Everest Group, pleasecontact us:

Jimit Arora, VP Research: [email protected] Sengupta, Practice Director: [email protected]

Yugal Joshi , Practice Director: [email protected] S, Analyst: [email protected]

Phone: +1-214-451-3110Email: [email protected]

Everest GroupTwo Galleria Tower13455 Noel Road, Suite 2100Dallas, TX 75240
https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/12031mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/12031https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951https://research.everestgrp.com/Product/11951


12/12


12

Everest Group

Leading clients from insight to action

Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping

Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With afact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use anddelivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting,original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent andsourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of globalservices, providers of services, country organizations, and private equity firms in six continents across all industry categories. Formore information, please visit www.everestgrp.com and research.everestgrp.com.

Dallas (Corporate Headquarters)[email protected]+1-214-451-3000

New [email protected]+1-646-805-4000

[email protected]+1-416-865-2033

[email protected]+44-207-129-1318

India / Middle [email protected]+91-124-496-1000

Stay connected

Blogs

www.sherpasinblueshirts.comwww.gainingaltitudeinthecloud.com

Websites

www.everestgrp.comresearch.everestgrp.com

Twitter

@EverestGroup@Everest_Cloud
http://www.everestgrp.com/http://research.everestgrp.com/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://research.everestgrp.com/http://twitter.com/EverestGrouphttp://twitter.com/Everest_Cloudhttp://twitter.com/Everest_Cloudhttp://twitter.com/EverestGrouphttp://research.everestgrp.com/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://research.everestgrp.com/http://www.everestgrp.com/

Impending Contract Renewals: A Futuristic View of the Renewals Market Place

Documents

Transcript of Impending Contract Renewals: A Futuristic View of the Renewals Market Place